January 12, 2018 / 12:53 PM / a year ago

EMERGING MARKETS-Brazil markets little changed, brush off S&P downgrade

    By Bruno Federowski
    SAO PAULO, Jan 12 (Reuters) - Brazilian financial markets
were range-bound on Friday as investors mostly shrugged off a
sovereign ratings downgrade by Standard & Poor's.
    S&P late on Thursday cut Brazil's credit rating deeper into
junk territory as doubts grew about a presidential election in
October and a push to trim its costly pension system.

    The move was widely expected after lawmakers delayed in
December a key vote on the unpopular pension bill to February,
much closer to October's elections.
    Investors see the pension overhaul, a landmark proposal of
President Michel Temer's administration, as crucial to
curtailing growth of public debt and safeguarding economic
growth for years to come.
    Indeed, some said the downgrade could help Temer pressure
lawmakers into approving the plan to avoid further damage.
    "The government will certainly use this downgrade to
pressure Congress, though it is still highly uncertain whether
it will be successful in doing so," analysts at Coinvalores
brokerage wrote in a client note.
    The Brazilian real was flat and interest rate futures
 were barely changed.
    The benchmark Bovespa stock index slipped 0.2
percent, with shares of real estate and utility firms
 among the biggest decliners.
    The Mexican peso edged higher for a second day,
though uncertainty over the future of the North American Free
Trade Agreement (NAFTA) kept a lid on gains.
    The peso weakened significantly on Wednesday after a Reuters
report said Canada increasingly believes that President Donald
Trump will soon announce his intention to withdraw from NAFTA.

    Key Latin American stock indexes and currencies at 1230 GMT:
 Stock indexes                            daily %    YTD %
                                           change   change
 MSCI Emerging Markets           1206.77     0.82     3.33
 MSCI LatAm                      2966.99     0.17     4.73
 Brazil Bovespa                 79216.84    -0.19     3.68
 Currencies                               daily %    YTD %
                                           change   change
 Brazil real                      3.2193    -0.05     2.92
 Mexico peso                     19.1835     0.48     2.69
 Chile peso                          604     0.22     1.76
 Colombia peso                   2856.48    -0.12     4.39
 Argentina peso (interbank)      18.7000    -0.37    -0.53
 Argentina peso (parallel)         19.36    -0.21    -0.67
 (Reporting by Bruno Federowski; Editing by Bernadette Baum)
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